Demand for second homes surges in September, rebounding from summer slowdown
SEATTLE, Oct. 20, 2021 / PRNewswire / – (NASDAQ: RDFN) – In September, demand for second homes was 60% higher than before the coronavirus pandemic, according to a new report by Redfin (redfin.com), technology-based real estate brokerage.
That’s according to a Redfin analysis of mortgage rate foreclosure data from real estate analysis firm Optimal Blue.
A mortgage rate freeze is an agreement between a buyer and a lender that allows the buyer to lock in an interest rate on a mortgage for a certain period of time, providing protection against future increases in interest rates. Buyers must specify whether they are asking for a mortgage rate for a primary residence, secondary residence or investment property. About 80% of mortgage rate freezes translate into actual home purchases.
The popularity of vacation homes skyrocketed at the start of the coronavirus pandemic, with many affluent Americans choosing to leave city life and work remotely. But the increase in demand for second homes has started to slow as cities lifted stay-at-home restrictions, the initial shock of the pandemic has worn off, the spring-home buying season has ended. ended and the overall housing market began to cool.
A new rule by Fannie Mae has probably also contributed to the slowdown in demand for vacation homes, according to Redfin deputy chief economist Taylor Marr. The government-sponsored mortgage company announced in March its intention to limit the number of secondary and investment home loans it would buy, which would make it more difficult and costly for some buyers to take out mortgages on homes in the region. vacation.
“The market may have overreacted a little bit to the Fannie Mae rule, which would explain why we have seen second home demand rebound,” said Marr. “Mortgage rates are also on the rise, likely creating a renewed sense of urgency for vacation home buyers who wish to purchase properties before rates rise further.”
In the middle of last month, the Treasury Department and the Federal Housing Finance Agency announced that they would to delete the aforementioned restrictions imposed on Fannie Mae in an attempt to boost housing supply. This will likely help keep demand for second homes above pre-pandemic levels for the foreseeable future, Marr said.
Permanent remote work policies can also fuel a sustained interest in second homes. Earlier this month, Amazon.com Inc. said it would allow many employees to work from home indefinitely. Microsoft Corp. recently made a similar announcement.
To view the full report, including charts and methodology, please visit:
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